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Maersk Poised to Sign Iran Oil Deal in 2 Months

Denmark's Maersk Oil, a new subsidiary of French energy group Total, could sign a deal early next year to develop an offshore Iranian oil project in the Persian Gulf, according to the chief executive officer of Pars Oil and Gas Company.

"Maersk is likely to sign the second IPC deal within two months," Mohammad Meshkinfam said, referring to Tehran's new framework to develop its oil and gas fields, dubbed as Iran Petroleum Contract, ISNA reported on Monday.

Maersk Oil has held talks on taking over the crude oil layer of South Pars, a giant gas deposit where its new parent company Total holds a multi-billion stake.

The $7.5-billion buyout of Maersk Oil by Total in August complicated Iran's yearlong negotiations with the Danish company, but "measures have been taken not to face any problem from the merger", Meshkinfam said without elaboration.

The deal will strengthen Total's position in Iran's energy market which became the first major western oil company to return to Iran after the lifting of sanctions last year. The world's fourth-largest oil firm has agreed to develop an offshore phase of South Pars in a $5-billion deal.

The partnership with Maersk is aimed at catching up with Qatar, which started developing the oil layer of the joint field in 1991. The Arab country has drilled more than 300 wells with the help of international oil giants, having extracted more than 1 billion barrels in the last 25 years.

"For eight years, we fell behind Qatar in production from South Pars, but we are now even," said the POGC chief.

Iran aims to stabilize production from the SP oil layer at the current production level of around 25,000 barrels per day, and gradually boost output to 55,000-60,000 bpd. Officials say that Maersk can help increase output to 150,000 barrels per day.

The oil layer is located 130 kilometers off the Persian Gulf coast and contains an estimated 7 billion barrels of oil in place. Iran began production from the SP oil layer in March.

Officials say due to the layer's complicated geological structure, advanced horizontal drilling technology is required to tap into the resources, which necessitates cooperation with Maersk.

Maersk produces oil from the Danish and UK sections of the North Sea, Qatar, Algeria and Kazakhstan. It supports global oil and gas production by providing modern drilling services to oil companies globally.

Despite faring poorly in production from the oil layer, Tehran says it has matched Qatar's natural gas extraction rate from the giant field that is reportedly at 550-600 million cubic meters per day.

Iran plans to raise gas production to 1.3 billion cubic meters a day from more than 800 mcm/d in five years, counting big on its mega South Pars project that accounts for more than two-thirds of its gas supply.